TRADE: New Language Would Give Developing Countries Leeway On Pharmaceuticals

by Martin Vaughan
Congress Daily

New language to be added to trade agreements is designed to give poor countries more leeway to get around patent and other restrictions on pharmaceuticals, by going further than the flexibility already included in side letters to agreements with Peru and Panama, according to House and private sector sources.

The new text, in the final stages of discussion between Democrats and U.S. trade officials, will bring exceptions to intellectual property rules closer in line with the 2001 Doha Declaration on those rules and public health, these sources said.

That declaration aimed to make sure that developing countries could take steps to protect public health, including issuing compulsory licenses to override patents.
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A bipartisan, conceptual agreement struck between lawmakers and the administration in May provided that the side letter, which has been a part of free-trade deals since the U.S.-Morocco trade agreement, will be incorporated into the text of agreements with Peru, Panama, Colombia and South Korea.

Democrats have long pushed for that step because they argue that side letters do not carry the same legal weight and enforceability as agreement text.

The conceptual deal also envisioned making direct reference to the Doha Declaration in the text of trade agreements. But sources said it is likely the text will also alter the wording of the side letter to make it more closely match that of the declaration — a step that pharmaceutical firms have pressed U.S. officials to oppose.

“Simply taking the side letter and plugging it into the text of the agreement was fine with us,” said one industry source. “If there are changes, we will have to see what the changes are.”

The side letter to the U.S.-Peru deal on exceptions for public health states that the agreement’s provisions “do not affect a Party’s ability to take necessary measures to protect public health by promoting access to medicines for all, in particular concerning cases such as HIV/AIDS, tuberculosis, malaria, and other epidemics as well as circumstances of extreme urgency or national emergency.”

House Ways and Means Trade Subcommittee Chairman Sander Levin, D-Mich., persuaded U.S. trade officials to drop the word “necessary” from that formula, which does not occur in the related section of the Doha Declaration, sources said.

Public health advocates have also urged striking the language regarding “circumstances of extreme urgency or national emergency,” which could be seen as limiting situations in which Doha flexibilities can be applied. However, that language will remain in the FTA text.

Intellectual property and health provisions were among the final sticking points in negotiations between Levin, Ways and Means Chairman Rangel, and the administration on the final text, which also included labor, environmental, and investment provisions.

That text has still not been completed, but U.S. trade officials are hoping to finalize it in time for agreements with Panama and South Korea to be signed next week.

Health activists said the new language stressing the primacy of the Doha Declaration is important, because the side letter left ambiguity as to whether obligations to protect pharmaceutical test data in the deals would keep needed medicines from coming to market, even after a country had broken patents on the drugs.

“Where the rubber hits the road is on data exclusivity and compulsory licensing,” said Robert Weissman, director of Essential Action. “The question is: Is data exclusivity going to be an effective prohibition on compulsory licensing?”

Activists and their Democratic allies have long pushed the administration to back off the more stringent protections for brand-name drugs in trade deals — including the requirement that countries prevent test data from being used to bring generics to market for a five-year period after the brand-name version has been registered.

“If the U.S. is able to get more and more countries to adopt these standards, it becomes increasingly difficult for the remaining ones to resist doing more than [multilateral agreements] require,” said Weissman.

The issue has taken on increased importance with recent moves by Thailand and Brazil to issue compulsory licenses to manufacture generic versions of treatments for HIV/AIDS and other afflictions.

Thirty-five House Democrats led by Reps. Henry Waxman of California and Tom Allen of Maine Wednesday criticized Trade
Representative Schwab in a letter for naming Thailand a “priority foreign country” in the trade office’s annual list of intellectual property rights violators. They called on Schwab to reverse that designation.

“It is difficult to interpret this decision as anything other than retaliation for Thailand’s recent actions. It sends a troubling message, not only to Thailand but to the whole world, that the exercise of recognized public health flexibilities in trade obligations is frowned upon by the United States,” the lawmakers wrote.

The House Democrats wrote that they were concerned that the “Special 301” citation would lead to a suspension of duty-free benefits for Thailand under the Generalized System of Preferences.